Market Observations

  1. FRIDAY IS A SINGLES ONLY DAY
    I cannot stress enough the importance of SINGLES ONLY FRIDAYS. This is an add-on day. You are only looking to make a little bit more, finish the week on a high note and go home early.
  2. COUNTER-TREND TUESDAY
    In a market with an established trend, Tuesday’s tend to be a reversal/correction day. Correction days are the most difficult trading days on the books. One is forever buying the highs and selling the lows, looking for a move that never materializes.
  3. NEVER EVER UNDERESTIMATE THE POWER OF THE BEAR
    The bear can undo years of hard work in a matter of months. The bear can undo months of hard work in a matter of weeks. The bear can undo weeks of hard work in a matter of days. In 2002 the DJIA traded at 7,200. Five years later in 2007, the DJIA traded to a high of 14,200. In sixteen months the DJIA traded as low as 6,470.
  4. YOU DO NOT SELL NEW CONTRACT HIGHS, YOU BUY THEM
    There is a reason a market trades to new contract highs. Picking a top is a disaster waiting to happen. You only sell new contract highs when you are taking profits on your long position.
  5. MAKING MONEY IS THE EASY PART…KEEPING IT IS THE GAME
    All traders know; limiting losses is vital to being a successful trader. We have all made money in the past. How much you keep when the market becomes difficult separates the good traders from the bad.
  6. DO NOT GIVE ALL OF A GREAT TRADING DAYS PROFITS BACK
    You have had a good start to trading earning $5,000. You think to yourself, $5k is a good day’s work. Should I quit trading? No. I will have a small break and get back at it. Set a monetary stop loss to retain your profits. I recommend 50%. If your profits for the day fall to a $2,500 gain; quit trading. The market opens the same time tomorrow morning.
  7. AFTER A GREAT TRADING DAY, THE NEXT DAY IS A SINGLES ONLY DAY
    It is impossible to be a superhero two days in a row. After a great trading day, the following day should be treated with a bit more caution. No over-trading. There is nothing worse than having an extremely profitable day on Tuesday and giving it all back on Wednesday.
  8. AFTER THREE CONSECUTIVE LOSING TRADING DAYS, TAKE A DAY OFF
    After three consecutive losing days, a day off should be mandatory.
  9. DO NOT TURN A LOSING TRADE INTO A REAL BIG LOSER
    A winning trade will keep you in the game. A scratch trade will set you up for your next trade. A losing trade will affect your thought process. Cut your losses quickly. Do not turn a losing trade into a real big losing trade.
  10. IT IS NOT A PROFIT UNTIL YOU TAKE IT
    No matter how much of a profit you have in a trade, until you cash in your chips your profit is still at risk. Take the money and move on to your next trade.